This paper reports results from an experimental implementation of Kiyotaki and Wright's (1989) search{theoretic model of money as a medium of exchange. The focus of the experiment is on the role played by at money in this environment. Fiat money is an object that serves as a store of value, but which has no intrinsic value to any individual. The question we address is whether such at objects ma...

in the past few decades, capitalist economic system has witnessed different financial crises the most important of which is the 2008 financial crisis. the crisis had different causes that the main causes are innovations and financial assets without actual backing (real underlying asset) and their developing by financial institutions. namely, financial institutions, especially banks, developed t...

Faced with real and nominal shocks, what should a benevolent central bank do, fix the money growth rate or target the inflation rate? In this paper, we make a first attempt at studying the optimal choice of monetary policy instruments in a micro-founded model of money. Specifically, we produce an overlapping generations economy in which limited communication and stochastic relocation creates an...

We introduce lotteries (randomized trading) into search-theoretic models of money. In a model with indivisible goods and fiat money, we show goods trade with probability 1 and money trades with probability {, where {<1 iff buyers have sufficient bargaining power. With divisible goods, a nonrandom quantity q trades with probability 1 and, again, money trades with probability { where {<1 iff buye...

the money creation by commercial banks, raises the question whether this phenomenon is defensible and vindicable from the perspective of economic values and goals in islam? opponents of bank money creation introduce it as an anti-stability, violator of ethics, unfair, violator of state power in exercising its right to publish money and stimulator of no priority social activities while defenders...

Article history: Received 8 September 2007 Received in revised form 9 April 2008 Accepted 17 July 2008 Available online 7 August 2008 A random-matching model with a clearinghouse is constructed to investigate the impact of privatemoney on economic efficiency and social welfare in threemonetary regimes. A subset of agents, called bankers, whose credit histories are recorded by the clearinghouse,...